Postal and logistics behemoth Deutsche Post DHL propped up its consolidated net profit in the second quarter of 2014 to EUR461 million (US$616 million), an increase of more than 9 percent over the same period last year.
Between April and June, revenues totaled EUR13.7 billion, nearly 1 percent above the previous year’s level, fueled by organic increases in revenue in all four of the company’s divisions as a result of what the group said is its strong position in rapidly growing market segments and regions. Operating earnings rose by nearly 6 percent to EUR654 million in the second quarter, while adjusted earnings before interest and taxes (EBIT) climbed by nearly 11 percent.
“The company’s successful performance in the second quarter is a further demonstration of our group’s fundamental strength,” said Frank Appel, the CEO of Deutsche Post DHL. “We have both a high-potential business base and the ability to generate reliable gains in revenues and earnings even under challenging business conditions. With our double-digit increase in EBIT, we demonstrated these two strengths during the past quarter.”
For the remainder of 2014, the group expects only slight improvement in the global economic environment, but forecasts continuation of the company’s positive earnings trend as it confirmed its full-year guidance for the year. Consolidated EBIT for the year is expected to rise to between EUR2.9 billion and EUR3.1 billion.
However, the company adjusted its expectations regarding the EBIT contributions of its divisions. The Post-eCommerce-Parcel (PeP) will contribute an additional EUR100 million to earnings following its good operating performance in the first half of the year. As a result, the division’s total EBIT contribution in 2014 is now expected to be around EUR1.3 billion.
Due to a challenging market environment for global forwarding, the freight division now expects operating earnings to be between EUR2 billion and EUR2.2 billion from the previous EBIT growth assumptions of between EUR2.1 billion and EUR2.3 billion.
Deutsche Post DHL expects to generate further earnings growth beyond the current year. Between 2013 and 2020, it expects earnings growth of more than 8 percent per year on average. The DHL divisions are expected to continue to be the main contributor to the company’s revenue growth and to the anticipated strong increase in profitability, with an annual average EBIT growth of about 10 percent per year. At the same time, the PeP division is forecast to increase operating earnings by an average of around 3 percent each year.
To achieve these long-term targets, the group will make further investments in 2014 and 2015, focused on the global forwarding program of the freight division and continued improvements in the supply chain division.
EBIT increase next year is expected to be significant, but has been modified. The group said it has “consciously decided to refrain from providing a specific guidance for 2015” as it has not yet determined the exact amount of the additional investment restructuring measures it will make.
Specific earnings targets for 2016 have been introduced for the first time. The company now expects a higher group EBIT of EUR3.4 billion to EUR3.7 billion two years from now. The DHL divisions should contribute EUR2.45 billion to EUR2.75 billion of this total, and the PeP division is expected to generate EBIT of more than EUR1.3 billion in 2016.
UPS announces Q2 earnings
On the other hand, United Parcel Service (UPS) announced adjusted diluted earnings per share of US$1.21 for the second quarter of 2014, a 7.1 percent improvement over the prior-year period. E-commerce shipping in the U.S. and strong international export growth contributed to a 7.2 percent increase in global package shipments.
The company announced plans to increase 2014 operating expense for capacity- and peak-related projects to a total of $175 million. Some of these expenditures include expanded operations on the day after Thanksgiving, accelerated deployment of route optimization software, IT development, additional hub sorts, and temporary capacity.
“As a result of this accelerated growth and our preparation for peak season, we are making investments in new capabilities and network capacity to ensure we meet customer expectations,” said Kurt Kuehn, UPS chief financial officer.
“These initiatives will increase operating expense this year, but will provide financial benefits for years to come,” he added. “As a result, we have lowered our expectations for adjusted diluted earnings per share to be in a range of $4.90 to $5.00, a 7-to-9% increase over 2013 adjusted results.”
CEVA earnings drop on lower rates
Meanwhile, CEVA Holdings reported that its revenue for the second quarter ended June 30, 2014, declined 4.2 percent to US$1.978 billion compared to $2.064 billion for the same period a year earlier.
Airfreight and ocean freight export volumes went up year-on-year. Ocean freight volumes were up 7 percent in the second quarter, and airfreight volumes increased 1 percent.
For the second quarter, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) totaled $60 million, or 25 percent lower than in the same period a year earlier as freight management revenues were impacted by lower rates in the market. CEVA, however, was able to maintain net revenue margins versus the prior year.
